Yahoo Music Unlimited hits limit, inks deal with Rhapsody

Yahoo and RealNetworks have announced that Yahoo Music Unlimited will be …

Yahoo has decided to kill off its music subscription service and send its subscribers to Rhapsody. Today, the two companies announced a strategic partnership that will see all of Yahoo Music Unlimited's customers transferred to RealNetworks Rhapsody subscription service.

Today's announcement comes as something of a surprise, given last week's rumors that Yahoo was planning a DRM-free MP3 store to supplement Yahoo Music Unlimited. Ian Rogers, Yahoo vice president of video and media applications, has been a longtime foe of DRM, railing against the music industry's reliance on copy protection as an antipiracy tool. When it comes to downloaded music, DRM is pining for the fjords, opening the door for Yahoo to follow Amazon's footsteps and become the second online music store to offer DRM-free tracks from the Big Four labels.

Instead, Yahoo Music Unlimited customers are now facing a migration to RealNetworks' competing Rhapsody subscription service. The companies have pledged to make the changeover as painless and transparent as possible for Yahoo customers. Subscribers to Yahoo's service will continue to have access to their downloaded music after the transition is complete, and the company's plan to collaborate on other digital music services such as downloads.

The deal marks the latest in a series of moves by RealNetworks to make Rhapsody more appealing. Late last summer, the company convinced the MTV family of networks to pull the plug on their URGE joint venture with Microsoft in favor of Rhapsody America.

Indeed, Rhapsody has become the most popular music subscription service, and adding Yahoo Music Unlimited's subscribers will only bolster its position against the competition. Some of those Yahoo customers may not stick around, however. Subscriptions to Yahoo's music service are only $5.99 per month for those who pay by the year, and $8.99 if billed monthly. According to the two companies, Yahoo customers will continue in their current pricing tiers "for a limited time" after the migration to Rhapsody. After that, they'll likely be faced with the choice of paying $14.99 for Rhapsody To Go or $12.99 for the browser-only Rhapsody Unlimited. With services such as Last.fm now offering free streaming music, some Yahoo Music Unlimited users may not stick around for long after the transition to Rhapsody.

As for Yahoo, the company still plans to keep a presence in the music business, even with Rhapsody acting as the "exclusive, on-demand service" for Yahoo. The web giant will continue working the social networking angle and becoming a "starting point" for an "indispensable music experience," according to Scott Moore, Yahoo senior VP and head of media. A starting point is always good, but with the company shutting down its music subscription service, users' final destinations are likely to lay outside of Yahoo's borders.